Accidently on Purpose

Economic woes and double-digit unemployment are being blamed for a rash of staged auto accidents by criminals against unsuspecting motorists to line their pockets through fraudulent insurance claims.

Ten people were arrested earlier this year for their alleged involvement in an auto accident ring operating near Raleigh, NC The state’s Department of Insurance reports that five different insurance companies paid out a total of $76,217 because of fraudulent claims made by the group between August 2009 and January 2010. Similarly, six people in Miami-Dade and Naples, Fla. were recently charged with faking car accidents and billing insurance companies up to $170,000 for medical treatment that was never performed, according to the Florida Division of Insurance Fraud.

Scams are especially common in states that have no-fault auto insurance that allow policyholders to recover financial losses from their insurance companies regardless of who’s at fault. Twelve U.S. states currently have no-fault auto insurance laws, with Florida topping the list of no-fault states with dubious claims involving staged accidents. Connecticut isn’t one of them, although Massachusetts and New York are.

Fraudulent accidents are most likely to occur in wealthier areas where drivers are perceived to have better coverage, against women driving alone, and senior citizens, who are likely to be less confrontational at accident scenes.

According to the National Crime Insurance Bureau in Des Plaines, Ill., one of the most common staged accident scenarios involves the “swoop and squat,” in which a perpetrator’s vehicle pulls in front of a victim’s car and slams on the brakes, forcing a rear-end collision. Other circumstances involve on-purpose sideswiping in busy intersections with multiple left-turn lanes, and the so-called “drive down” in which the criminal motions to the victim to merge into traffic or out of a parking space, then speeds up to bash into it, later denying ever motioning at all.

“Staged auto accidents are a dangerous criminal activity that target innocent drivers with increasingly bold schemes aimed at defrauding insurance companies,” says Loretta Worters, vice president with the Insurance Information Institute in New York City. “Not only do honest policyholders ultimately end up paying more for auto insurance, but those committing the fraud can cause serious injuries or death.”

At the least, getting into a forced accident costs a victim the inconvenience of having to take a vehicle in for repairs and having to deal with doctors, lawyers and insurance companies. A victim’s premium could skyrocket because of the claim, or the insurance company might choose not to renew the policy.

The NCIB advises motorists to avoid becoming victims of staged accidents by maintaining a proper distance from the traffic ahead to ensure there’s enough room to stop in case the driver ahead suddenly slams on the brakes. If a collision occurs, call the police and obtain a report with the officer’s name on it. Count the number of passengers in the other car and write down their names and phone numbers – more people may subsequently file personal-injury claims than were originally in the vehicle. Take pictures of the damage with a cellphone camera to help circumvent a larger claim if the criminal further wrecks the car before taking it to an adjuster.

Also, be wary of “runners” who quickly appear at the scene and suggest specific doctors and attorneys; physicians who insist on filing injury reports when you’re not hurt and tow trucks that arrive without being called that may be working with unscrupulous doctors or lawyers.

The NCIB urges accident victims who suspect fraud to immediately alert their insurance agents and local law enforcement officials, and to call its toll-free hotline at 800-835-6422 to report the incident for further investigation.